CIO’s Role in Digital Procurement Transformation

Digital transformation in the corporate space is on the rise, being driven more and more by Chief Information Officers (CIOs). A 2019 Gartner survey found CIOs are now responsible for around 40% of digital transformation budgets, while two thirds of the global 1000 CIOs are putting digital transformation at the centre of their strategy.

In procurement, according to Hackett Group study (2019) procurement-specific technologies are expected to be far more broadly adopted over the next two years, e.g. e-procurement, unsurprisingly, will be in use at 96% of organizations (either broadly or in specific processes). However, some of the most common roadblocks to progress are the lack of budget and requisite IT skills. What will it take for CIOs to win in this industry?

With the explosive growth of digitalization, more options, systems and technologies are available than ever, and today’s solution may not guarantee tomorrow’s success. At the same time, too many procurement organizations have woken up to the fact that legacy operating models are not responding to market needs. How should CIOs choose the right system and supplier?

Lasse Riekkinen, Managing Partner and R&D Director at Cloudia, has some insights from the CIO perspective for both organizations purchasing procurement systems and for the teams developing them.

Need curiosity across the business

According to the same Hackett Group study, staying closely in tune with the needs of the business remains critical to ensuring that your digital transformation strategy is in line with future needs.

Lasse Riekkinen, agrees, stressing that: “Today’s IT people need to be able to understand the whole value chain. That means not just concerning themselves with their own contribution, but being curious and informed about what’s going on before and after it.” For example, if you’re implementing procurement software, you would do well to understand what’s going on in the supplier market that the software is supposed to serve, including being up to speed on pricing, competition, as well as which products and services are in hot demand.

“It’s also not enough anymore to excel in one specific technology, or development area.” Take an IT person who’s highly skilled in backend development, their proven logic is always the fastest and most elegant, but no matter how hard they try, they can’t visualise a user interface and so they can’t build it. This makes them incapable of adopting the required skills to understand what the user is going through.

“Today’s IT people need to be able to understand the whole value chain. That means not just concerning themselves with their own contribution, but being curious and informed about what’s going on before and after it.”

Finding the right eProcurement solutions

When it comes to advising customers on choosing digital procurement solutions, Riekkinen focuses first on what customers should not do.

“Don’t take the blingiest, flashiest piece of software for one specific service,” Riekkinen urges. “Instead find things that will fit it into your existing ecosystem, so that in the end whatever you have can become one unified platform.”

The worst outcome is when each module is purchased to solve a specific concern for a specific business area and can’t otherwise be integrated with other services across the business. “You’re buying a series of dead services that don’t benefit you beyond the one thing that each has been designed to do.”

Riekkinen gives the example of a contract manager who buys a new standalone solution to help manage contracts. Once it’s installed, the manager’s team is happy; most of their tasks are automated, which makes their daily work easier. But what about the rest of the organization? There’s no point having a shiny new top-of-the-line contract management system if it doesn’t allow you to link the purchases made on your contracts to your actual invoicing systems. You get no feedback on how your contracts are actually performing.

“The information in this one specific system cannot be enriched by any incoming information and can only perform within its own narrow scope,” Riekkinen explains. “And, while one group is revelling in their great new toy, the others suffer.”

So, how do you identify the right partner and technologies?

The fact that old ideas are boldly sold under new names adds to the confusion among buyers. Instead of jumping in, you need to first look under the hood and experiment with agility. In other words, the sooner you can succeed or fail, the sooner you can determine whether it’s the emperor’s new clothes or something really useful.

“Basically, the most important thing is being able to do a quick proof of concept. I wouldn’t buy from a company that can’t offer one,” Riekkinen advises.

For Cloudia customers, secure and agile experimentation is provided by the DevOps operating model, which enables highly automated software development, testing and maintenance operations.

“The most important thing is being able to do a quick proof of concept. I wouldn’t buy from a company that can’t offer one.”

Who’s doing the buying?

“So, in today’s organizations, you could say it’s not just what service you buy but who is doing the buying that dictates the outcomes.” In Riekkinen’s experience even a CTO typically cares less about information flows and more about matching the right technologies to solve each need as it arises.

That means at the strategic planning level, the CIO’s mandate to analyse the whole performance of a particular procurement software solution is better suited for organization-wide success.

CIOs can also work effectively in partnership with good CTOs, and in collaboration with other key stakeholders.

“Again, it comes back to team-work, and inspiring people from in and outside the business to work together for shared goals,” Riekkinen stresses. “In procurement, it’s collaboration and this kind of unified approach that will, above all, define success for the future CIO.”

Collaboration as a competitive advantage

Cloudia, because of its organizational structure, does not have a traditional technical team as such, however, as Riekkinen puts it: “We’re basically a bunch of people with expertise in specific areas and technologies, but our tasks are not limited to those specific areas or technologies.”

This is based on the premise that if Cloudia’s software solutions have to collaborate across an organization then the teams designing them must also be capable of collaborating.

“It should be the same for us as it is over at the customer, working together and using the software to solve problems.”

“If software solutions have to collaborate across an organization then the teams designing them must also be capable of collaborating.”

Learning beyond your own expertise

As part of this push for collaboration, Cloudia is implementing DevOps across the whole company.

DevOps enables Riekkinen to pull together cross-cutting project teams that work across the organizational split. “It can’t just be developers working in a vacuum, a good solution needs to empower people from all over the business towards common goals,” Riekkinen affirms.

So, Riekkinen would argue that the most important attribute for today’s IT person is the ability to learn new things beyond their own expert areas. Team members, who are unable or unwilling to embrace the business as a whole are promoting a siloed approach to IT as well as limiting a CIO’s resources.

“Digitalisation has reached a tipping point,” Riekkinen confirms, “and I’m pleased to see that CIOs and their teams are now leading the charge. Corporate IT is no longer five geeks in the basement delivering hardware, they’ve been propelled to the Executive floor and charged with building and operating the new digital platforms that will redefine business competitiveness as we know it.”

CIO’s Role in Digital Procurement Transformation

Lasse Riekkinen
Director, R&D and Production
Cloudia

 

P.S. Find out why today’s geek must wear multiple hats and have a good head for business!

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